The luxury fashion and accessories giant, Kering, has announced modest growth for the first quarter of 2021. Despite their success, the company is trailing their competitors in their sector. GlobalCosmeticsNews covers the details behind their reports and what this means for their future.
1. Business Update: Kering Reports Modest Gains
Kering, the French holding company well-known for its luxury fashion and lifestyle offerings, recently reported some promising gains. Working through a tumultuous year, the conglomerate has made some minor, but meaningful progress.
- Its revenue growth increased by 3.2% in the first quarter of 2021.
- Its portfolio of luxury brands (including Gucci, Yves Saint Laurent, and Bottega Veneta) continues to strengthen its presence in the global luxury sector.
- The company’s modernization drives are bearing fruit, particularly its readiness to embrace digital-first retail.
Kering’s CEO François-Henri Pinault praised the group’s resilient performance in an official statement, citing the “remarkable rebound for the Asia Pacific region and a gradual recovery in the US and Europe.” Despite only a modest overall growth, the company was able to sustain solid margins and cash positions, which gives it the possibility of further investments in their long-term strategy.
2. Struggling to Keep Up: Kering’s Luxury Competitors Outperforming
Though a consistent top performer, Kering is facing increasing competition in the luxury fashion space. High-end fashion powerhouses like the LVMH Group, Richemont and Hermès have been gaining ground, outpacing Kering’s growth. With their focus on younger luxury shoppers and digital marketing campaigns, these companies have increased marketability and visibility among key consumer groups.
Kering’s efforts to respond to the changing demands of a dynamic market have yet to pay off in terms of profit growth and market share. Their attempt to diversify has resulted in the following:
- A focus on men’s fashion and on more affordable luxury apparel tiers
- Acquisitions of niche luxury brands, like Stella McCartney and Balmain
- Increased presence in the Asian consumer market
Despite these measures, Kering’s competitors are continuing to outperform them. While their larger conglomerates may not be feeling the squeeze just yet, the luxury fashion giant must continue to innovate and find ways to stay ahead of the competition in order to maintain their leading position.
3. Taking Steps to Enhance Performance: Kering’s Plan of Action
Elevating performance is an essential aspect of Kering’s corporate strategy. As such, our plan of action has been carefully crafted to ensure that we meet our potential and ambitions. To this end, we have identified the following strategies, which should maximize our output and lay solid foundations for future growth.
Continual Learning and Development: staff training and professional development are high on our agenda, as they equip us with the skills and understanding necessary to achieve sustainable success. We offer regular seminars and workshops on topics such as strategic management and crisis management, both as an in-house resource and as a partner to external providers.
Group-Wide Communication: ensuring knowledge flows between staff in all departments, teams, and hierarchical levels is key to the sharing of best practices and the creation of a collaborative atmosphere. We have implemented regular forums for discussing new challenges and solutions, with the management team leading from the front.
Innovation and Exploration: a huge part of our strategy for the coming year involves investigating potential new markets, products and services, as well as looking for opportunities to build on existing ones. In order to remain a leader in our field, we’ve set up a specialized innovation team to drive us forward.
Investing in Technology: embracing cutting-edge technology is one of the main ways we can continue to stay ahead of the competition. As such, we invest heavily in the latest computer hardware and software, as well as experimenting with tools such as Artificial Intelligence and machine learning.
4. Looking to the Future: Kering Challenges Ahead
The fashion industry is an ever-changing landscape built around technology, luxury and trends. Kering, one of the largest fashion houses, is no stranger to embracing change in the future. As the demands of consumers shift and the world becomes increasingly digital, Kering will have to tackle new challenges.
Digital marketing has transformed the dynamics of the industry, and Kering is no exception. The company will have to rise to the challenge of leveraging its presence online in order to reach customers. It should build a presence in various platforms, like social media and e-commerce, in order to increase visibility, build relationships and engage with customers. Additionally, Kering must look at its sustainability initiatives, aiming to reduce its overall environmental impact.
- Kering Challenges Ahead:
- Developing a strong digital presence in social media and e-commerce platforms
- Exploring sustainability initiatives to reduce environmental impact
Kering’s modest growth during the first quarter of 2020 in the face of a turbulent market is a testament to the brand’s strength and resilience. To conclude, Kering’s determination and innovation continues to shine through in a highly competitive luxury market and this collective agility will serve them well as they move forward.
